Can a lawyer disclose the client's fee agreement to the client's subrogated insurer, and must a side agreement reducing the fee be disclosed?

Plain-English summary

The inquiry concerned whether a lawyer may disclose the fee agreement with a client to that client's insurer, who has a subrogation interest in a recovery and an obligation to pay fees and a portion of costs, and whether the lawyer must disclose the terms of an agreement with the client to reduce the lawyer's fees in order to effect settlement.

The committee concluded that the fee agreement would not generally be considered a "confidence" as defined in the Rules of Professional Conduct, and that it also would not be a "secret" unless the client had requested that it not be disclosed or the information would be embarrassing or likely detrimental to the client. Even if the fee agreement were "confidences or secrets" under RPC 1.6, the committee said disclosure seems necessary to provide maximum recovery for the client and to carry out the representation. It concluded that although the lawyer may disclose the fee agreement, the lawyer would be wise to obtain the client's prior consent.

The committee further concluded that the lawyer must disclose to the insurer, pursuant to RPC 4.1(a), the terms of any side agreement with the client that modifies the contract concerning the payment of fees, because the contract with the client controls the fees paid by the insurer.

Currency note

This opinion was issued in 1999, before the Washington State Bar Association's adoption of the 2006 revisions to the Rules of Professional Conduct. Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule, deadline, or requirement mentioned here. Washington's confidentiality rule (RPC 1.6) was substantially revised in the 2006 revisions, including the move away from the older "confidences and secrets" terminology, so verify the current rule text before relying on it.

Common questions

Q: Can a lawyer give the client's fee agreement to the client's subrogated insurer?

A: The committee concluded the fee agreement is generally not a confidence or secret, and even if it were, disclosure seems necessary to maximize the client's recovery; the lawyer may disclose it, but would be wise to obtain the client's prior consent.

Q: Must the lawyer tell the insurer about a side deal reducing the fee?

A: Yes. The committee concluded the lawyer must disclose to the insurer, under RPC 4.1(a), the terms of any side agreement modifying the fee contract, because the client contract controls the fees the insurer pays.

Q: When would a fee agreement count as a "secret"?

A: The committee said it would be a "secret" if the client had requested it not be disclosed, or if the information would be embarrassing or likely to be detrimental to the client.

Background and rules framework

The opinion applied Washington RPC 1.6 (confidentiality of information), corresponding to ABA Model Rule 1.6, using the then-current "confidences and secrets" framework, and RPC 4.1(a) (truthfulness in statements to others), corresponding to ABA Model Rule 4.1. The committee distinguished a disclosure that advances the client's recovery from a misrepresentation to the insurer about the operative fee terms, treating the latter side agreement as something RPC 4.1(a) requires the lawyer to disclose.

Citations and references

Rules of Professional Conduct:

• ABA Model Rule 1.6 (confidentiality of information); Washington RPC 1.6
• ABA Model Rule 4.1 (truthfulness in statements to others); Washington RPC 4.1(a)

See also

• WA Ethics Op. 1872: Billing Audits, Confidentiality
• WA Ethics Op. 1316: Insurance Counsel, Coverage Secret
• WSBA Ethics Op. 943: Insurer Counsel and Confidences

Source

• Landing page: https://ao.wsba.org/print.aspx?ID=1082

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

Advisory Opinion: 1888
Year Issued: 1999
RPC(s): RPC 1.6; 4.1(a)
Subject: Client confidence or secret; disclosure of fee agreement to insurer with subrogation interest; disclosure of side agreement

The inquiry concerned the issue of whether it is permissible for a lawyer to disclose the fee agreement with a client to that client’s insurer, who has a subrogation interest in a recovery and an obligation to pay fees and a portion of costs; and, whether the lawyer is required to disclose the terms of an agreement with the client to reduce the fees to the lawyer to effect settlement.

The fee agreement would not generally be considered to be a "confidence" as defined in the Rules of Professional Conduct. It also would not be considered a "secret", unless the client had requested it not be disclosed or the information contained within would be embarrassing or would be likely to be detrimental to the client. Even if the fee agreement is "confidences or secrets" under RPC 1.6, disclosure seems necessary to provide maximum recovery for the client and to "carry out the representation." Although the lawyer may disclose the fee agreement, he or she would be wise to obtain the client’s prior consent.

In addition, the lawyer must disclose to the insurer, pursuant to RPC 4.1(a), the terms of any "side agreement" with the client that modifies the terms of the contract concerning the payment of fees, since the contract with the client controls the fees paid by the insurer.